A company's equity is the difference between its total assets and total liabilities. Also referred to as 澳洲幸运5官方开奖结果体彩网:shareholders' equity, it is 𓆏used in fundamental analysis to determine the company's value.

Equity represents🀅 the net value of a company, or the amount of money left over for sha🐬reholders if all assets were liquidated and all debts repaid. 

How to Calculate Company Equity

The formula forไ calculating shareholders' equity is:

$\begin{aligned} &\text{Shareholder's Equity} = \text{Total Assets} - \text{Total Liabilities} \\ \end{aligned}$​Shareholder’s Equity=Total Assets−Total Liabilities​

Company or shareholders' equity can be determined by calculating the company's total assets and liabilities. For example, the equity of a company with $1 million in assets and $500,000 in liabilities is $500,000 ($1,000,000 - $500,000).

Where to Find Data for Company Equity

As per the formula above, you'll need to find the total assets and total liabilities to determine the value of a company's equity. For publicly traded companies, the information required to compute company or shareholders' equity is available on the 澳洲幸运5官方开奖结果体彩网:balance sheet.

A company's total assets include:

• Current Assets: These are very 澳洲幸运5官方开奖结果体彩网:liquid assets. This means they can be converted to cash within a year. Examples include cash, accounts receivable, and inventory. 
• Non-Current Assets: These are long-term assets that cannot be converted to cash or consumed within a year Examples of non-current assets are investments, 澳洲幸运5官方开奖结果体彩网:property, plant, and equipment (PP&🅘;E), and intangibles like patents.

Total liabilit꧃ies co﷽nsist of current and long-term liabilities:

• Current Liabilities: This category is made up of debts that are typically due for repayment within one year. 澳洲幸运5官方开奖结果体彩网:Accounts payable and taxes payable are types of current liabilities.
• Long-Term Liabilities: These liabilities are obligations due for repayment over a year, including bonds, leases, and pension obligations. 
  

Why Is Company Equity Important?

Company or shareholders' equity often provides analysts and investors with a general idea of the company's financial health and well-being. It can be negative or positive. If it is positive, the company has enough assets to cover its liabilities.🎃 If it's negative, the company's liabilities exceed its ass🃏ets.

As such, many investors view companies with negative equity as risky or unsafe. However, many analysts use equity in conjunction with other fina𓄧ncial metrics to gauge the soundness of a company. Wh𝄹en combined with other tools, an investor can use equity to accurately analyze the health of an organization.

Company equity is an essential metric when determining the return being generated versus the total amount invested by equity investors. For example, 澳洲幸运5官方开奖结果体彩网:return on equity (ROE), which is the company's net income&n♔bsp;divided by shareholders' equity, measures how well a company's management is using equity from investors to generate profi🔯t. 

Example of Company Equity 

Below is the for Apple (AAPL) as of March 2025. For that period:

• Total assets (in green) were $331.2 billion
• Total liabilities (in red) were $264.4 billion 

Subtracting liabilities from assets, we see that shareholders' equity was therefore $66.8 billion ($331.2 billion -$264.4 billion). This is the same figure reported lower on the balance sheet, under shareholder equity.

The $𓃲66.8 billion value in company equityꦆ represents the amount left for shareholders if Apple liquidated all of its assets and paid off all of its liabilities.

An alternative calculation of company equity is the value of 澳洲幸运5官方开奖结果体彩网:share capital and 澳洲幸运5官方开奖结果体彩网:retained earnings less the value of 澳洲幸运5官方开奖结果体彩网:treasury shares.

Shareholders' equity is an effective metric for determining the net worth of a company, but it should be used in tandem with analysis of all financial statements, including the balance sheet, 澳洲幸运5官方开奖结果体彩网:income statement, and 澳洲幸运5官方开奖结果体彩网:cash flow statement.

The Bottom Line

Equity represents the stake that shareholders have in a company. If you want to calculate the value of a company's equity, you can find the information you need from its balance sheet. Locate the total liabilities and subtract that figure from the total assets to give you the total equity.

Shareholders consider this to be an important metric because the higher the equity, the more stable and healthy th☂e company is likely to be.